Have Patents Run Their Course?

Does anyone believe innovation would cease if we eliminated patents and depended on trade secrets, copyrights, and trademarks only?

When I was learning engineering, patents were a given. You'd work on a new product, innovate along the way, and then meet with a patent attorney to file for US and overseas patents. I have two patents myself. But now I'm asking: Are patents still useful to society? I have my doubts.

I am not speaking about other intellectual property copyrights, trademarks, and trade secrets. All of these are useful to society and the creators of the new works, methods, and technology. In some cases, they may be the alternative to patents, particularly trade secrets.

An intellectual property right granted by the Government of the United States of America to an inventor to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States for a limited time in exchange for public disclosure of the invention when the patent is granted

It's a deal. If you publicly disclose the invention, you get a monopoly on its use for a certain period of time. There are three types of patents -- utility, design, and plant patents. Utility patents relate to how something works, design patents deal with how something looks, and plant patents deal with vegetation. Their periods of exclusivity are typically 20, 14, and 20 years, respectively.

I will ignore plant patents for now, as most high-tech patents deal with utility, though some deal with design. Whether it's 14 or 20 years, here we have our first conundrum.In the high tech world, what is the utility to society for the disclosure 14 or 20 years later? Not much. 10 generations of Moore's Law have made most patents obsolete by that time. No one would believe that patents should award monopoly use forever, but 20 years is pretty much forever in high tech.

So, the deal is asymmetric -- the value of the patent is much more valuable to a patent holder than it is to society.

But is the limited value to society even positive at all? As I stated earlier, I have my doubts. The enforcement mechanisms have a cost. Not just the costs or the courts and all the lawyers involved, but the cost of stunted innovation by players, both large and small, wary that their product will be targeted by others with massive patent portfolios. Some small corporations, pejoratively known as patent trolls, buy patents just to pursue lawsuits and settlements against larger players. Patents are bought and sold so they can be used offensively and defensively.

All of these are big costs with very little evidence that they further innovation. Indeed, they are stifling it. One of the latest events that drove this home for me has been the patent war between Apple and Samsung. After Samsung won a patent judgment against Apple in a US venue (The International Trade Commission), the Obama administration vetoed the judgment. It's not taking sides in this dispute, but it makes you wonder if even the US government still believes protecting patents is in the public interest, or whether they are counterproductive.

I've reviewed many existing patents, and I find many of them have significant overreach. They patent things that are obvious or just different. Many patents are just engineering, not fundamental invention. This creates a huge domain for disputes, and their associated costs.

So, what would I suggest if patents were eliminated? Two things: trade secrets and time to market. If you really do have a novel technology, run with it. Stealing secrets would still be illegal. Coca Cola never patented Coke -- the formula is a trade secret. Others imitated it to partial success, but we didn't say they were the only cola manufacturer for 20 years. And society isn't crumbling because Coke is still a secret.

Innovate and get to market quickly. Apple's iPhone was a huge success for Apple, and took time for competitors to imitate (better or worse, depending on your judgment). Does anyone believe innovation would cease if we eliminated patents and depended on trade secrets, copyrights, and trademarks only? I don't. Eliminating patents may not be optimum for all markets. Perhaps the model still works well for pharmaceuticals where the development times are long, and public safety may require disclosure. But for high tech, patents may have run their course.

You highlighted the root of the problem -- 90% (maybe more) of all patents issued should be invalidated based on obviousness "to one skilled in the art", or if not invalidated, then their overly broad claims should be severely curtailed to reflect the actual innovation that the deserves protection.

I remember a patent attorney who had a framed plaque on his wall, a gift from another patent attorney friend & colleague -- a gift intended to convey both humor and praise. It was made to look like the claims section of an actual U.S. patent, and it read:

The patents are especially useful for startups who might be still far away from their product but might need to protect what they already know. It is a tool to get more fundings as IP have their monetory values. All-in-all unless the inventor is sure that the idea needs to be a trade secret and noone can reverse-engineer to find the idea, one needs some kind of protection on ideas.

You are absolutely correct that the problem is a lack of respect for the system, but it goes even further, there is a lack of respect for the patent itself. Many of the great innovations we use and appreciate in products today were originated, that is invented, by an individual inventor or small company, known as a small entity in patent parlance. In many instances it is impossible for the small entity to keep its invention as a trade secret, particularly when attempting to obtain the backing necessary to commercialize the invention. Without patent protection the rightful owner of the invention has no recourse when some unethical large corporation (is that an oxymoron?) steals the invention. And, why do you think we have all of this negative publicity about patents? Could it be that the large corporations are using secret, and sometimes not so secret, public relations firms to create so called grass roots opposition to patents. Do they do that because they have been found guilty of stealing the intellectual property of others and punished accordingly? If you really want to know how this all works you only need to follow the trail of the innovation from small entity to large corporation. Rarely will you discover that the innovation is legally acquired but you will find that the infringer crys foul when they are brought to justice and blames the patent system.

I understand, when looking at Samsung vs Apple (or most of the other patent battles that make the news today), why someone would question the value of the patent system. I totally get that it needs reform, but let's not loose site an important point. One of the intents here is to level the playing field. A number of these industry giants started with 2 or 3 guys in a garage or some obscure rented lab space. For us old guys, that's was part of the attraction that pulled us into this industry. What if the next "big thing" comes from some unknown inventor from a tiny company? Patents are supposed to protect this guy's IP from the industry "giants". Without some sort of protection, these little guys are simple crushed by the bigger players. Reform may be indicated, but let's not throw out the baby with the bath water.

Not all patents are useless for technological innovation. The problem is that there are far too many patents (easily 90% of all) that should be invalidated based on obviousness. A less direct cure for the problem without invalidating any patents may be by introducing classes of patents. For example:

Once a patent is classified by the patent office, the patent holder may later ask it to be reclassified (upgraded) based on the change of technology. Who would have thought that the transistor will be revolutionary 60 years ago? Also the class of a patent limits the royalties. For example for a class-5 patent the royalties should be limited to a maximum of 0.02% of sales, for a class-4 patent they may be worth five times as much at 0.1%, and for a class-3 patent at 0.5%, and so on.

Invention will not be reduced without patents. But, innovation (the process of bringing inventions to market) would be significantly curtailed. Without the possibility of market control via patents, the possibility of significant profits would be reduced. This would directly reduce any investment in the invention. Such investments include other people willing to work to assist the inventor as well as capital investments.

I too have argued, tongue in cheek, many times that we should eliminate patents, just to mstimulate a good discussion.

That's too radical, but there are still significant reforms needed to counter a system that is out of whack.

Your suggestion the term of a patent should be reduced from 14-20 year to maybe 2-3 is a good one. But as much as that makes sense for electroncis I suspect it is exactly wrong for pharma.

This is a complex system with diverse stakeholders and actors. It've very hard to find changes that don't have unintended consequences. That can drive one to frustration of saying scrap the whole thing, which is also wrong.

Putting aside the need for reform, the author ignores the many values of patents. First, in disclosure of the application (if disclosed) and ultimately the patent, even during the exlusive use of the patent, the patent itself is a valuable tool in research for researchers, competitiors, suppliers, etc.

Second, the author says that many patents are "just engineering." Yes, engineers and scientists (among others) can patent their inventions. Many engineering improvements are patents and certainly should be protected by their owners.

Third, author argues there is no public good to disclosure 15 years (after 14 years) later. NOT TRUE. Tell this to people buying the "generic" versions of drugs after patents expire. The generics save untold millions (billions) for consumers EVERY YEAR. These would not be possible if the science of the drugs and manufacturing were kept secret instead of patented.

Any system (run by the govnerment) is going to be fraught with problems. It doesn't matter if its copyright, patent, or other rights of ownership. But that doesn't make the system useless. It may be imperfect and it may be inefficient, but improving it is the only option, not eliminating it.

Think of the recent cases of the wrong houses being demolitioned by demolition crews. Does this mean we should do away with real property ownership ?

A big barrier to revamping the system is there are already too many patents with the overreach problem. They have to be invalidated en masse before rebooting the patent system. But already too much has been spent on them, which brings up the second barrier, that patent-related costs are rising because it is a good business for those involved. Even USPTO fees went up.

It is clear that the patent system desperately needs to be updated at the very least. The time constraints were created long before the fast product evolution we have now. 20 years is an insanely long patent on most things. I'm not sure we need to dump the process, but it really needs to be re-imagined.